Downward Price-Based Brand Line Extensions Effects on ...€¦ · Downward Price-Based Brand Line Extensions Effects on Luxury Brands Marcelo Royo-Velaa Eileen Vossb a PhD., Full

Business and Economics Research Journal

Volume 6 Number 3 2015

pp. 145-161

ISSN: 1309-2448

www.berjournal.com

Downward Price-Based Brand Line Extensions Effects on Luxury

Brands

Marcelo Royo-Velaa Eileen Vossb

a PhD., Full Professor of Marketing, University of Valencia, Faculty of Economics, Department of Commercialization and Market

Research, Valencia, Spain, [email protected] b

University of Valencia, Faculty of Economics, Department of Commercialization and Market Research, Valencia, Spain,

[email protected]

Abstract: This study tries to examine the brand concept consistency, the self-concept

congruence and the resulting loyalty status of the consumers in order to evaluate whether a downward

price-based line extensions in the luxury goods market has any negative or positive effect on them. By

conducting focus group and in-depth interviews it was tried to filter out how brand concepts of luxury

brands are perceived before and after a line extension. Results revealed that a crucial aspect for the

evaluation of downward price-based line extensions is the exclusivity variable. Additionally, the

research showed different modification to the brand concept consistency after an extension depending

whether the brand is bought for pure hedonic or emotional reasons or actually for functional reasons.

As practical implications brands appealing to hedonic/emotional motivations need to be crucially

differentiated to those brands appealing to functional/rational motivations. In the case of a mixed

concept an in-depth segmentation of the target markets is needed in order to successfully reach the

consumers’ needs.

Keywords: Brand concept, line extension, downward price, luxury market, qualitative, loyalty.

JEL Classification: M30, M31

1. Introduction

According to Millward Brown (2014) the luxury sector grew by 12% in the year 2013,

ascending its value to $2.9 trillion, 7% more than in the previous year. In the 2007 and 2013

Top 100 Global Brands report 10 and 7 luxury brands were included respectively (Business

Week 2011; Interbrand, 2013), showing astonishing brand value and supreme marketing

strategies helping the brands to reach and maintain such leading positions.

By definition line extensions are a branding process whereby a current brand name is

leveraged to enter a new market within the same product class through form or price

changes (Nkwocha, 2000; Kirmani, Sood and Bridges, 1999). Brand and line extensions

present an attractive way to leverage the equity associated with the already well-known and

established brand name, to other product groups or cheaper product categories (Quelch and

Kenny, 1994; Loken and Deborah, 1998; Jackson, 2004). These line extensions accordingly aim

to leverage the consumer value perception of the existing brand for the new extended

product line (Aaker and Keller, 1990).

This study is of value due to the apparent reliance of luxury goods companies on brand

extension as a way of increasing their sales and diversifying into new cheaper consumer

segments (Quelch and Kenny, 1994). However, this strategy may affect the loyalty of their

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former consumers due to a possible change in the brand concept consistency and self-image

congruence. Thus, line extensions also bear risks and might harm the image of the brand in

the long run (Loken and Deborah, 1998; Bottomley and Holden, 2001; Case, 2004, Meyers,

2004; Britt, 2006). According to Keller and Sood (2003), brand and line extensions can be a

double edged sword, as they on the one hand can present, when managed well, a new source

of revenue and help reinforce the meaning and image of the brand, but on the other hand

they may harm the parent brands image and equity, if the brand becomes diluted by the

extensions. Brand dilution takes place whenever the consumers no longer associate the

brand with the new, extended product, and start to have a less positive attitude towards the

brand (Kotler and Keller, 2006). The brand is affected by both, high and low involvement

(Gurhan-Canli and Maheswaran, 1998) and ownership or degree of familiarity with the brand

(Kirmani, Sood and bridges, 1999).

The luxury goods industry has undergone significant developments and the notion of

luxury must now be seen in a different way, if not even in a cheapened way (Britt 2006). The

developments resulted among other factors mostly from two interrelated factors (Okonkow,

2005; Meyers, 2004). On the one hand, the middle class is increasingly able to buy more

expensive merchandise, while traditional luxury marketers are expanding their brands into

mass segments. On the other hand, more and more upscale luxury brands have answered to

the economical trend of wealthier consumers by diversifying their product portfolio to mass

market segments and continuing to launch more affordable lines (Jackson, 2004; Meyers,

2004).

Resulting from these changes the luxury market structure and its marketing is changing

(Okonkwo, 2007, Kapferer and Bastien, 2009) and the definition of luxury has to be seen in a

different scope (Meyers 2004). It could be argued that the exclusivity image is endangered

due to the greater availability and affordability of the brands and its goods (Kirmani, Sood

and Bridges, 1999) as well as which effects may have on luxury image the adaptation to

virtual environment by luxury brands (Okonkwo, 2009). Consequently the whole notion of

luxury is evolving and possible effects of the evolution need to be anticipated. If the myth

that surrounds the luxury goods market transformed – whether positive or negative – which

implications does that have for the marketing of these goods. It needs to be seen how

consumers – whether former or anticipated consumers – will react to the alterations.

With this study it will subsequently be tried to examine the effect of brand line

extensions into cheaper segments upon the loyalty of luxury brand consumers. The purpose

of the study is therefore to investigate any negative or positive relationship between line

extensions and the brand concept consistency on the one hand and consumer self-identity

congruence on the other hand. Having evaluated this relationship it will then be seen what

implications these two factors have upon consumer loyalty, in order to enable marketers to

adapt their brand and extension strategies accordingly.

As the consumer of luxury brands is therefore the core part of this study and as such a

deep insight into the consumers’ psychological motivations and emotions needs to be taken.

Accordingly the study will evolve around qualitative research as a first step. With the

qualitative method, the underlying facets are being examined and may subsequently be

taken as a basis for developing a quantitative research as a second step. However, research

which actually evaluates how consumers are affected by the current developments in their

identification and purchase behaviour towards the brand has been limited.

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2. Literature Review and Hypotheses

2.1. Brand Concept Consistency

Luxury goods can be said to be purchased for emotional and symbolic motives, as their

main purchase or usage purpose is not functional, but psychological and social. Luxury goods

are purchased for reasons of their status image and the possibility to display ones position in

society with them (Han, Nunes and Drèze, 2010). For that reason the importance of luxury

goods lies in its symbolic and emotional attributes and its potential to develop positive

relationships between consumers and brands (Choo, Moon, Kim and Yoon, 2012). If

consumers of luxury goods do not consider the brand’s symbolic characteristics and image to

be important though, there is subsequently a strong likelihood that they will not perceive

such brand to possess status or to be suitable for conspicuous consumption (Edell and Burke,

1987). According to Okonkwo (2005) these symbolic attributes or associations have the ability

to convey upon the consumer an extra-added psychological value of esteem, prestige and

status sense, which differentiates them from the masses.

As the underlying characteristics or personality for which luxury goods are purchased

are exclusivity, uniqueness and novelty value (Haasler, 2006; Phau and Pendergast, 2000), the

motivation to buy luxury goods is thus driven by an intrinsic desire to fulfil needs for self-

esteem and recognition (Kotler and Kettler, 2006). Brands that are positioned to maintain

exclusivity communicate the prestige, status and roles position of the user of that brand

(Zinkham and Prenshaw, 1994) and thus will be bought by consumers trying to show their

status in society.

Brand concept consistency has a significant effect in brand evaluations (Sweeny and

Bao, 2009) and seems to predispose consumers’ reaction to brand line extensions (Park,

Milberg and Lawson, 1991). A brand concept is the mean with which a product is positioned

in the mind of consumers and differentiated from other brands in the same product category

(Park, Jaworski and MacInnis, 1986). The concept consist of brand-unique, abstract meanings

and associations that have their origin in certain product features such as price and/or status

image (Park et al 1991). Brand concept consistency therefore exists in the extended product

line, if it shares the same meanings to the consumer as the parent brand. The research

undertaken by Park et al. (1991) suggests that prestige or luxury brand extensions may be

positively evaluated as long as the extended product lines share the luxury concept.

Cheaper versions of the brands products might not fit within the brand associations of

expensive product and high status and then it could affect the overall brand concept.

Therefore it may be presumed that the further a brand extends downward to reach cheaper

consumer segments, the less consistent the overall brand concept will remain. Following

from this, hypothesis 1 can be stated as:

H1: The greater the downward price-based line extension of a luxury brand, the less

consistent consumers will perceive the overall brand concept.

2.2. Self-Congruity

The stimulus to convey one’s own self is often the critical factor driving consumers to

purchase certain goods (Sirgy, 1986) and accordingly goods are purchased to act as an

instrument to express their identity (Aaker, 1996). Also, it is assumed that products and



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brands on their own assert an image. This image often reflects the stereotype image of the

typical user of the brand – the brand user image (Kressmann, Sirgy, Herrmann, Huber, Huber

and Lee, 2006). Consumers are therefore often not induced to purchase a good or brand

solely by its functional attributes, but by the symbolic elements that create the identity or

image of the product (Levy, 1959; Park, Jaworski and MacInnis, 1986). Self-congruity or brand

user congruity is defined as the degree of perceived similarity by the potential consumer

between the typical user of the brand –brand user image- and him or herself (Sirgy, 1982,

1986; Sirgy, Grewal, Mangleburg and Park, 1997).

The product image interacts with the consumer’s self image and generates a subjective

experience referred to as self-image/product-image congruence or self-congruity (Sirgy,

Grewal, Mangelburg and Park. 1997). The greater the congruence between the meaning of

the symbols of the brand or the brand image and the consumer’s actual and ideal self

concept, the more likely that consumer will be motivated to belief that the purchase of that

particular brand will meet his need for self esteem (Kressmann et al., 2006; Liu, Olaru, and Li,

2008).

On this line it can be concluded that consumers will buy luxury goods, if their image is

consistent with what the consumers perceives of himself and wishes to portray to the public.

Therefore, luxury goods are purchased for their status image associations and differentiating

ability, which match the consumers self image.

Luxury consumers buy prestige brands primarily for hedonic reasons, fulfilling their

need for conspicuous consumption and self-esteem. Affluent consumer can be said to be

motivated to buy luxury goods, as they believe that those brand personalities and association

best portray their own self-image. Subsequently it is interesting to research whether this

belief will still be realized when the luxury brand extends into cheaper segments and

becomes as well a brand for other market segments. This changes the brand personality and

the match between product user image/consumer-self-concept and product image/

associations. Therefore the second hypothesis is stated as follows:

H2: The greater the downward price-based line extension of a luxury good, the

weaker the consumer perceived congruence between brand image and consumer self-

image – self congruity.

2.2. Consumer Loyalty

Emotions towards the luxury brand can play an important role in brand loyalty, trust

and satisfaction (Song, Hur and Kim, 2012; Han and Jeong, 2013). However this research only

lies on the attitudinal and behavioural components of brand loyalty (Oliver, 1999; Neal and

Strauss, 2008). Oliver’s definition of loyalty accentuates two components: attitudinal and

behavioural (see Oliver, 1999:34). Brand loyalty thus drives to behaviour, which in turn is

rooted in a positive attitude towards a specific brand. In some cases –i.e. luxury brands- this

indicates that consumers become loyal to a brand if the brand is able to convey a unique

benefit that cannot be found elsewhere. Some brands have invested in marketing

communication strategies to develop in the long term a brand personality with which they

acquire a character similar to that of a person. This brand personality is also a brand strategy

to target consumers and to build relationships with them that result in brand loyalty (Aaker,

1996).



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Research carried out by Kumar, Luthra and Datta (2006), has shown that brands with a

clearly communicated and consistent personality, meaning that the brands are shown in the

market continuously with the same associations and attributes, have a greater number of

consumers who are loyal to the brand than brands that redefine themselves continuously or

portray an inconsistent image. Brand identification, meaning that the consumers are able to

identify themselves with the attributes and value of the brand serves as a vital function

towards a loyal attitude to the brand (Liu et al., 2008; Liu, Li, Mizerski and Soh, 2011). The

symbolism of the brand is supposed to emphasize to others a certain uniqueness possessed

by the owner of the brand (Oliver, 1999).

Relating this with the notion of luxury, which implies unique brand personalities and

differentiation ability, it can be presumed that the more consistent and differentiated from

non-luxury goods the personality of the brand is the greater the ability of the brand to gain

loyal luxury consumers. Consumers that are loyal to a brand evolve in continuous purchasing

because they perceive some unique attributes in the brand that no other alternative can

provide. That uniqueness often derives from a more favourable affect or emotion when the

consumer uses it (Chaudhuri and Holbrook 2001).

Former research has proven the direct and indirect effects of self-image congruence on

brand loyalty (Kressman et al., 2006; Sirgy et al., 2008; Liu et al., 2011)) and the role of brand

concept consistency in the consumer evaluation of brand extensions (Park et al., 1991). Taken

together these two aspects play a vital role in the overall success of a company to gain and

sustain a loyal consumer base. It follows that if consumers perceive the overall concept of the

brand to be inconsistent after a downward price-based line extension and correspondingly do

not recognize a prevailing congruence between their self-concept and the image of the brand

anymore, they might be presumed to become less loyal to the brand.

Resulting from this the third hypothesis is stated as:

H3a: The weaker the consumer perceived luxury brand concept consistency, the

smaller the loyalty of consumers to the luxury brand.

H3b: The weaker the resulting self-image congruence, the smaller the loyalty of

consumers to the luxury brand.

3. Methodology

In order to be able to test the hypothesis, the study needed to investigate consumer’s

feelings and thoughts about a brand concept before and after a price-based line extension.

Additionally the respective self-image congruence, made up of the actual and ideal self-image

in comparison to the brand image or brand-user image also need to be researched

As a first research step qualitative techniques –i.e. focus group and in depth interview-

were applied. A group or a person to person dialogue enabled participants to discuss the

brand concepts and changes occurring through the extensions, taking into account other

opinions and commenting on them. The participants were able to elaborate, which helped to

reveal the nature and origins of their thinking on the particular issue (Bader and Rossi, 2007)

– in this case on the issue of luxury goods, their line extensions and the effects of this

strategy.



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For hypotheses testing1 purposes, the objectives of the focus group were the following:

a) understand the consumers’ perception about luxury goods and revealing important brand

personality traits and brand associations, which define luxury for the consumers; b) identify

the underlying motivations why luxury goods are bought and what value proposition they

offer to the consumer; c) comprehend and evaluate how consumers attach their own

personality to the luxury goods they buy and, trying to reveal the consumers’ emotions and

attitudes towards price-based brand line extensions in connection to their self-image and the

overall brand concept.

In total 6 people attended the Focus Group and their respective profiles can be seen in

Table 1, below:

The choice of the participants was dependent on the specific luxury brand and the

respective product category of the brand of which they were a consumer of. The reasoning

behind this was that the brands and respective product categories needed to be already

established in order for consumers’ tastes and preferences to be acquainted and not evolving

(Kumar, Luthra and Datta, 2006). The brands were chosen taking into account both their

symbolic personality/image associations and their prestige value-creating attributes, which

are most likely to influence the brand loyalty of the consumer (Kumar et al, 2006). Part of this

value-creating attributes had to be the conspicuousness of the brand, in order to secure an

evaluation of the brand on the grounds of symbolic criteria as opposed to functional ones

(Kressmann et al., 2006).

The Focus Group took place in August 2007 in Hamburg, a city in the north of Germany

and it was held on a weekday night at eight p.m. The session was taped with a voice recorder,

as 2 participants did not feel comfortable being filmed and did not want to be recognized.

The participants were only told though that the research was conducted in order to expose

consumers’ attitudes towards luxury goods and the underlying motivations for buying them.

The exact details about the brand concept issues, self-concept matters and loyalty were not

directly mentioned though to prevent from biased answers.

To evaluate the brand concept and the self-image congruity (actual and ideal self-

congruity), the brand personality framework developed by Aaker (1997), was applyed. Brand

personality was defined as the set of human characteristics associated with a brand (Aaker,

1997). The brand personality measure consists of 15 personality traits, which in turn reveal

five major personality dimensions (Aaker, 1997). The framework is illustrated in Table 2.

Grounding on these personality traits and dimensions, it was tried to capture the self-

image and the brand concepts as perceived by the participants before and after a fictitious

1Hypotheses testing have to be validated applying a quantitative approach allowing statistical extrapolation for the variables

involved, its relations and effects. Some of these variables are identified along the qualitative stage.

Table 1. Focus Group Participants’ Profiles

Sex Age Occupation Consumer of following luxury brands

Female 32 Journalist Gucci, Valentino, LVMH, Prada

Female 39 Lawyer Gucci, LVMH, Mulberry, Chanel,

Female 47 License Manager Chanel, Valentino, Boss

Female 60 House-Wife Strenesse, Gucci, Lancome, Valentino, Dior

Male 41 Entrepreneur Porsche, Mercedes, Gucci

Male 57 General Manager Porsche, Mont Blanc, Boss, Dior

Source: the author themselves



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downward price-based line extension as well as to evaluate the effects of the extension on

them. In order to achieve this, it first had to be tried to establish the current brand concept of

the luxury brands and the current self-image – actual and ideal – of the participant, so that a

basis for comparison was necessary to develop.

To do so, two in-depth interviews were carried out to uncover deeper insight into the

research topic and the findings of the focus group discussions. This was done through

concentrating on the specific issues of importance revealed by the focus group. The in-depth

interviews allowed exploring the contextual boundaries of the focus group to uncover

understandings about the nature (Malhotra and Birks, 2007: 207) of luxury brands.

The objectives for the in-depth interviews were the followings: a) verify the

understanding of consumers’ perception about luxury goods and important brand personality

traits/brand associations as revealed by the focus group discussion; b) reassure the

motivations underlying a purchase of luxury goods on a one-to-on basis; c) intensify the

knowledge about self-image congruence on the basis of the information found out in the

focus group and, d) extending the knowledge about consumers’ emotions and attitudes

towards downward price-based line extensions in connection with the brand concept

consistency and repurchase intention. Two in-depth interviews were held also in August 2007

on two days in Hamburg, Germany (see Table 3).

Table 2. Aaker’s brand personality measures

Brand Personality Components Personality Dimensions

• Down-to-earth

• Honest

• Wholesome

• Cheerful

• Daring

• Spirited

• Imaginative

• Up-to-Date

• Reliable

• Intelligent

• Successful

• Upper Class

• Charming

• Outdoorsy

• Tough

• Sincerity

• Excitement

• Competence

• Sophistication

• Ruggedness

Source: Aaker (1997)

Table 3. In-Depth Interview Participants’ Profile

Sex Age Occupation Consumer of following luxury

brands

Female 48 Senior Brand Manager Chanel, LVMH, Valentino, Dolce &

Gabbana

Male 54 Ophthalmologist Porsche, Versace, Bang and Olufsen




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Similarly to the focus group discussion, the actual known and purchased luxury brands

of the participants were taken as main stimulus in order to establish the necessary familiarity

with the brand and the image of the particular brand. When talking about luxury brands the

participants were told to refer to their own past experiences and opinions about luxury

brands with which they are accustomed with. This was an important prerequisite, as the

participants needed to be able to refer back to their established emotional feelings about the

brands on a symbolic level. Brand that are not known or purchased are often not evaluated

on emotional grounds as the consumers’ then do not have an emotional attachment to them.

An already acquainted engagement between brand user and the brand was necessary.

As mentioned above, to be able to measure the brand concept-consistency and the

self-image congruence, the brand personality framework developed by Aaker (1997), as

suggested by Kressmann et al (2006) was employed, (see Table 2).

Focus group and in-depth interviews passed by the following steps: introduction;

warm-up (writing down 3 to 5 words participants associate to luxury and discussion);

projective (arrange those words according their importance in concentric circles being the

core one the most important and discussion); open-ended questions and discussion; brand

extension explanation and discussion.

4. Results and Hypotheses Testing2

The conducted research clearly supported the three conditions that predisposition the

success of line extensions as put forward by Reast (2005). These are the characteristics of the

parent brand, the characteristics of the line extension and the consumers' characteristics. As

stated by the participants of the research, the attitude towards a line extension varies

according to the following three variables: a) whether the brand is bought for symbolic –

image-, emotional motives or rational –quality- motives (these can be seen as differential

attributes of the parent brand); b) how far the new line enters a cheaper segment and how

differentiated the branding of the new line is from the parent brand (the characteristics of

the extension line) and, c) whether the consumer is still able to identify him or herself with

the new typical user of the brand after the extension has occurred -the consumers'

characteristics.

In this research the emphasis was put on downward price-based line extensions, in

which a luxury goods brand extended their lines into cheaper segments. In accordance with

Kirmani and Zeithaml (1993) and Park, Jaworski and Maclnnis (1986), who stated that a

prevailing association of luxury brands is often the price, because of the inference about the

prestige and exclusivity level that the consumer draws on the basis of that price, all

hypothesis were based upon a price based extension. Without regard or judgement to the

individual hypothesis though, it can already be seen, especially by the collage exercises

undertaken in the research, that the actual price or expensive attribute of a luxury good is

indeed taken into considerations by consumers but it is not at all always the determining and

prevailing characteristic that makes a brand to become a real luxury brand.

More important seemed to be the availability element' in the overall concept of the

luxury brands. It was revealed that the greater the accessibility to merchandise of the brand,

2Hypotheses testing is related to qualitative results, so generalization is nor possible nor accurate. This testing process has to be

validated and taken as a conceptual and relevant variable identification basis for quantitative research. The quantitative research

is proposed as future research in the conclusions epigraph.



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the less exclusive and thus the less luxurious the brand will be perceived by consumers.

Resulting from this, it can be said that if a price-based line extensions of a luxury brand

results in an increased availability - which is more than likely the greater the extension will be

- the likelihood of an inconsistent overall brand concept will increase. This variable supports

hypothesis 1, but it has to be pointed out that if the availability of the brand is not affected by

the line extension, hypothesis 1 would not be supported. Thus, Hypothesis 1 is only partially

supported.

In addition to that the branding of the new line plays a vital role as well. As mentioned

by the focus group participants, the inconsistency of the overall brand concept depends on

whether or not a clear differentiation between the parent brand and the extended brand is

possible. If there is no clear cut between the cheap and expensive line -for example through

an obvious differentiated brand name– the overall brand concept is more likely to be

perceived to be inconsistent.

An additional factor which affects to hypothesis 1 lies in the assumption that luxury

goods are bought more for emotional, symbolism or hedonic motives than for functional

ones. This idea was to some extent discarded by the participants, as they revealed that for

buying a luxury good often a prime motivation is the superior quality, a rational one. This

variable affects to hypothesis 1 to the extent that if the extension does not diminish the

quality of the extended and original product, the downward price-based line extension would

not affect the perceived consistency of the overall brand concept of a superior quality

offering.

It was also revealed also that consumers might perceive a luxury brand that extends to

a cheaper segment as dishonest and not trustworthy. Brands are often felt to have given a

promise about their value proposition towards the consumer. In the case of luxury brands

this promise is about their exclusive image and giving the consumer the feeling of owning

something special among other emotional engagements with the brand. This promise is felt

as being broken, if a brand suddenly engages in the mass market. In other words, consumers

who trusted in a brand value promise feel betrayed.

Nevertheless, between the lines it could be seen that the respondents thought of

themselves as hard workers and accordingly worth a luxury good. Following from this it can

be concluded that the match in this case was obvious between the actual and ideal self, the

way in which a person would like to perceive him or herself and would like to be seen by

society (Sirgy, 1982) and the image of the brand. Sirgy (1982: 289) concluded in his research

of various self-concept literatures that consumers will be stimulated to purchase a positively

valued product to maintain a positive self-image (positive self-congruity) or to enhance

herself by approaching an ideal image. Exactly this could qualitatively be witnessed by this

research, as the participants thought of themselves being worth a luxury good due to their

hard working life style.

After presenting the fictitious line extension, the image of the brand mostly changes

through the changing image of the typical user of the brand. This can be said to be

corresponding to a changing brand image, as Kressmann et al., (2006) have concluded that

the brands image is often found in the stereotype image of the typical user of the brand. A

consensus among the participants was that they would not like to be identified with or

compared to a person who buys cheaper luxury goods only to be part of a certain kind of

class. They did not like to be matched to the typical brand user of an extended line, which can



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also be translated into incongruence between the brand image of the extended luxury good

and the consumers' self-image. On this basis hypothesis 2 was supported by the research

participants who perceived the match between their image and the image of the typical user

of the extended brand as non coherent, due to the downward price-based line extension.

It again needs to be mentioned though that the support for hypothesis 2 is also only

partially. It is only in place if there is no clear possibility to differentiate the typical users of

the extended line and the original expensive luxury brand. If there is a clear branding

separation, the typical users will not be interchangeable and accordingly a downward price-

based line extension would not result in a weakened perceived congruence between the

brand ¡mage and the consumer's self-image.

Research undertaken by Kressman et al. (2006) and Park et al. (1991) has proven the

direct and indirect effects of self-image congruence on brand loyalty and the role of brand

concept consistency in the consumers' evaluation of brand extensions. Consumers are said to

be inclined to consume brands with a stable brand concept and a consistent match between

this concept and ones own personality and decline to consumer those which are not (Foxall,

1980). Considering the results of this research, these statements can be proved for goods

that are solely bought for image reasons to satisfy hedonic, symbolic or emotional needs,

such as the majority of luxury good brands. Due to the resulting transformation of the typical

user image, which is obvious to occur after a brand line extension penetrates a mass market

the concept of the entire brand - according to the participants - is being altered. The fit

between the image of the consumer and the image of the typical user cannot be matched

anymore. It means, according to participants, that repurchase intentions are brought down

which may be translated into a weaker loyalty.

Hypotheses 3a and 3b are thus supported for luxury goods that are solely bought

because of the image, emotional and prestige value proposition given by the brand. If

consumers perceive the concept of the entire brand to be inconsistent and not clear

anymore, their emotions towards the brand may change and attitudinal loyalty diminishes

resulting in a weakened behavioural loyalty, which supports hypothesis 3a. Similarly and in

support for hypothesis 3b, if the consumers' perceived self-image is not congruent anymore

with that of the brand, their repurchase behaviour becomes less predictable.

According to the findings of this research, goods that are bought for functional reasons

or rational motives –i.e. because a superior quality-, have to be taken into account

differently. It was argued that if the quality of the extended and original product stays the

same, a question about the repurchase decision would be answered with yes if the brand is

bought for quality attributes. In this case the concept of the entire brand evolves mostly

around the superior quality offering as value proposition and not around any symbolic,

emotional or hedonic attributes. Therefore, if the quality of the good stays the same, the

brand concept is not altered. If the quality instead would diminish due to an extension, the

quality concept of the overall brand would also suffer and a repurchase would not be as likely

as before. Hypotheses 3a and 3b are thus supported by the findings.

As summarized in Table 4 in which relevant variables identify in the qualitative

research are in the middle column, hypothesis 1 was supported for luxury goods that are

solely bought for emotional or symbolic motives. Here the downward price-based line

extension most likely increases the availability of the brand, which in turn diminishes the

exclusivity character and thus alters the brand concept, resulting in an inconsistent brand



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concept from the viewpoint of the consumer. Luxury goods that fall out of the pure image

associations, i.e. brands that are bought for their superior quality, do not suffer from an

inconsistent brand concept after a price-based line extension as this does not automatically

diminish the quality proposition or promise of the brand towards the consumer. For this

reason and only for functional brands hypothesis 1 is not entirely supported.

Hypothesis 2 is supported if the differentiation potential between the two brands -the

extended brand and the parent brand- is minimal. This lack of differentiation may result in a

mismatch between the new typical user image of the brand and the self-image of the former

Table 4. Illustration of Research Result Discussion and Hypothesis Testing

Hypotheses

Results or variables identify in qualitative

research to be used in quantitative

research

Hypothesis

Test*

1. The greater the downward

price-based line extension,

the less consistent the

perceived overall brand

concept

- price if not prevailing determining

attribute of luxury brand - if downward

price-based extension increases

availability of brand, clear inconsistency

with brand concept (+) - difference

between pure image-brands and

functional-brands bought for quality (-)

Partially

supported

2. The greater the downward

price-based line extension,

the weaker the perceived

congruence between brand

image and consumer self-

image

- no identification potential with

prevailing typical user image of extended

lines (+) - incongruence between self-

image of former consumer and typical

user image of extended line (+) -

congruence between self-image and

typical user image of overall brand

depends on extend of differentiated

branding (-)

Partially

supported

3a. The weaker the perceived

brand concept consistency,

the smaller the loyalty to the

luxury brand

- loyalty for luxury goods that are solely

bought for hedonic reasons negatively

affected by weakened brand concept

consistency (+) - loyalty for luxury goods

that are bought for functional reasons not

affected, as long as quality promise is

being upheld, but this in turn implies the

consistency of the brand concept (+)

Supported

3b. The weaker the

consumers' self-image

congruence, the smaller the

loyalty to the luxury brand

- loyalty status of consumers negatively

affected by incongruent fit between self-

image and image of brand after line

extension (+) - incongruent self-image'

mostly due to changing typical user image

of extension line - significance of negative

effect dependent on magnitude and

distance of extension

Supported


*Pending validation using quantitative research



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consumers. If the branding of the new extension line clearly differentiates between the two

users - the typical user of the cheap line and the typical user of the old expensive line - the

self-image of the former consumers is still congruent with the image of the parent brand,

which, in this case, does not support hypothesis 2.

Taken together, if both an inconsistent brand concept (H3a) occurs due to a downward

price-based line extension and a resulting incongruent self-concept or mismatch between the

consumers' image and the image of the brand (H3b), loyal attitudes towards the luxury brand

will diminish and consumer repurchase behaviour will diminish also. These results support

H3.

5. Conclusions, Managerial Implications and Limitations

The first objective of the current study was to research on affected variables by brand

line extensions in the luxury goods market. All hypotheses were based on the price variable,

which according to the literature reviewed seemed to be a crucial characteristic of luxury

goods. However it was seen that the price is actually only an instrument to keep the

availability of the brand and its goods restricted and therefore not the dominant variable

characterising luxuries. The most affected variable in this research was the exclusivity image

of the luxury brand, which makes it unique and special to the consumers.

In their research Kirmani, Sood and Bridges (1999) conclude that the consumers'

evaluation of line extensions based on price depends on a function between the brands

image, which in the case of this study was called the brand concept, the stretch direction and

the ownership status. These three already developed aspects were set as predispositions for

this research. The study was manipulated with the concept of the brand -a luxury goods

brand- the stretch direction, which in this case was set to be a downward price-based stretch

and finally the ownership status, as only consumers of luxury brands took part in the study.

After examining the results of the research, which validated the three mentioned

aspects, the list can now even be added by two further attributes which influence the

consumers' evaluation of price based line extensions. These attributes identify in the

qualitative step are actually variables to take into account when researching in the

quantitative step which has to follow in future research (see table 4). These two aspects are

the actual magnitude of the extension -how far into the mass market the extension goes or

how much the availability of the brand is increased- and the branding strategy or how

differentiated in their name and concept the extended line and the parent brand are.

Marketers who consider extending their brand need to be aware of these five aspects that

predisposition the consumers' evaluation of line extensions based on price. As seen by the

research, if the mentioned variables are not managed correctly, consumers may perceive the

concept of the brand as inconsistent and not matching their own self-image anymore

resulting in a declines attitude towards the brand. If nothing in exchange for this Iost is then

offered, former loyal consumers may apart from the brand and focus their purchase

intentions on brands that do still offer their wanted value propositions.

Therefore it can be said that attitude towards a luxury brand and its extension is

affected by brand availability. The more available a luxury brand is, the less favourable the

consumers' attitude towards the overall brand is. Also, emotions towards the brand may be

altering. This went as far as refusing to buy the brand if too many people owned the brand

already. Consequently when considering to extend a luxury brand a prevailing exclusivity



6(3)2015

157

character needs to be maintained, whether through a superior price (if the extension is not

based on the price) or through other variables, such as limited distribution through exclusive

dealers. Otherwise, the further the downward price-based line extensions will enter the mass

market segment, the more inconsistent the overall brand concept will become and the less

identification potential of the consumer with the brand image will be left resulting in an

incongruent self-concept.

Also, from the research results consumers seems to have the desire of something

special, whether it is a unique good or a special service or lifestyle. Thus, is important for

marketers to sustain the perception of exclusivity portraying something special around luxury

in order to keep their consumers. If an extension into mass markets is planed as part of the

marketing strategy to increase sales, an alternative for the current affluent consumers needs

to be developed. This may take the form of a special new product tailored for the need of the

affluent consumers, or a specialist service surrounding the purchase experience of the luxury

good.

A further research objective was to gain an insight into the psychological motivations

and emotions of luxury goods consumers in order to explore the role of brand concept

consistency and self-image congruence in maintaining brand loyalty. Although in general, it

can be said that the theory of conspicuous consumption is somehow still valid, the results of

this research suggest some new insights on motives to buy luxury brands. Consumers still buy

goods for expressive reasons to build an image of themselves to the outside world, but more

over even in order to reward themselves for their achievements - thus an intrinsic self-

esteem motivation. This is important information for brand managers to meet the

consumer's self-image with the concept or image of the brand, as the consumer likes to

reward him by merchandise that is perceived to be exclusive. This exclusiveness though does

not depend on the price of the goods, but more on the availability of the brand. In

considering extending a luxury goods line therefore, it is of significance to keep certain

exclusivity through a restrictive availability of the core brand. From the outset a restrictive

availability and a extension into the mass market seems to be contradictory, but the solution

behind this lies in the branding or managed differentiation between the extended sub-line

and the parent brand. Managers of luxury brands need to be aware of the magnitude and

distance of the extension they are going to introduce to the market. How far into the cheaper

market the brand will be extended and accordingly how excessive its availability will be – the

magnitude - and how differentiated the extended line will be from the parent brand - the

distance of the extension. Only if the branding strategy of the extended line clearly denotes a

difference to the parent brands attributes and value propositions will the brand concept be in

place and a congruence between the consumer self-image and the image of the brand will

happened.

A relevant implication in respect to the motivations of consumers to buy luxury goods

was found in the actual functional attributes of the goods. Although it was stated that most

consumers are not functionally oriented but only affected by symbolism associated to brands,

the results of this study have shown that a condition for the purchase of luxury goods is also

the functional attribute of quality. For this reason the marketing between brands appealing

to hedonic, emotional or symbolism motivations needs to be crucially differentiated to those

brands that have built up their brand concept mostly on functional attributes such as a

superior quality offering. In the case of a mixed concept between emotional and functional

value propositions an in-depth segmentation of the target markets according to either of the

two value propositions is advisable to marketers in order to successfully reach the consumers

needs.



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This research has to be seen as a preliminary stage in the entire research process about

this topic, as all data found out in this research is of qualitative nature. The sample size used

was also limited. Only one focus group discussion and two in-depth interviews were utilized

to collect relevant data. This again limits the research and future research could extend and

corroborate the findings by increasing the qualitative sample. This is a limitation to the

current research as the data may not be generalized as such due to the missing quantitative

support.

Although the results do give important insights into the effects of downward price-

based line extensions, the actual magnitude of the effects may vary across different brands of

luxury goods and services such as Hotel and travel, spa and resorts, technology or furniture

and decorations, and other variables such as nationality. This research was only undertaken

in one country, which again limits the ability to generalize the findings across other countries.

Luxury goods may have a totally different status and image in different countries depending

on the ethnicity, religion or culture of people and as a result the findings of the study may be

different (see Shukla, 2011). An interesting study approach would thus be for example to

compare the research results of a European country with those of Russia or an Asian country,

where luxury goods play a totally different role in society and the class differences amongst

the people are a lot more portrayed and noticeable. Through the findings of such a

comparison research especially international brand marketers could be helped to market

their brands in accordance to the different demands around the world.

Additionally, future research regarding this topic should try to concretise the meaning

of luxury even further, as it was sometimes challenging in this current study to find a

consensus among the participants as to what kind of luxury was subject of the study. In this

case the word “Luxury” was often taken as a generalized concept and it was seen that it is a

very objective phenomenon. What some people refer to as luxury does not necessarily by all

means to luxury to other people. Future research should try to test the findings of this study

with concrete narrowly defined luxury concepts of specific brands in order to give the

research a more tangible basis.

Finally some problems with the Aaker (1997) framework appeared to limit the research

to a certain extend. The participants had difficulties applying the concept of Aaker (1997) to

the personality of their ideal luxury brand as the framework did not include all traits from

participants. Due to this the evaluation of the match between the consumers' self-image and

the luxury brands personality turned out to be more difficult than expected.

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